Thomas Cook shares crash 70% amid fears for survival

Flat out: Thomas Cook's trading has been hit by its heavy reliance on customers in the stricken eurozone

Thomas Cook's future was thrown into serious doubt today when it admitted trading is terrible and it needs to borrow more money from banks to survive.

The already bombed-out shares crashed nearly 70% as investors fretted that the company may struggle to get through the winter - always a low point for holiday firms.

Thomas Cook is without a permanent chief executive since the sudden departure of Manny Fontenla-Novoa in August. He was paid more than £15 million in his four years at the helm, during which time the stock tumbled.

The company alerted the stock market today that "as a result of deterioration of trading", it is in "discussions with its principal lending banks with regard to its facilities".

Thomas Cook took £100 million from banks - it has 17 including those now effectively owned by the Government - just last month.

The company needs a similar amount again to deal with "the seasonal low period" as it grapples with debts of towards £1 billion.

Self-inflicted wounds aside, the company seems to be a victim of the eurozone crisis. It blamed particularly bad trading in Belgium, France and the Netherlands - sales have sunk 20% lately - for the strife.

A deal in Russia has also had "an extremely slow and poor start" warned finance director Paul Hollingworth.

By his account, the UK arm is faring relatively well. He said: "We have a tough trading position here, but it is not of the same magnitude."

The group employs 30,000 people, of whom nearly 20,000 are in Britain, in offices and stores on High Streets across the country.

Thomas Cook has issued three profit warnings this year and delayed the release of its full-year results, scheduled for Thursday.

The company stressed it is not currently in breach of the terms of any of its loans, but that it wanted to "improve its resilience if trading conditions remain difficult".

The shares fell 14.65p to 26.43p, leaving the it valued at £133 million.

In May, Thomas Cook revealed it lost £22 million after cancelling 160,000 holidays to Egypt and Tunisia as a result of those countries' political unrest.

It is presently being led by Sam Weihagen, an industry and company veteran. He has made it clear he does not want the job on a permanent basis.

On Sunday, it was reported the travel operator would close about 200 of its agencies and cut six aircraft from its fleet. Analysts expected it to make large accounting write-downs this week.

Meanwhile, arch rival TUI Travel has had a comparatively good period. Its stock fell 12p, 8%, to 138p today.

Ups and downs

July 1841: Thomas Cook's first venture - 540 of his temperance group members pay a shilling (5p) to travel 11 miles by train from Leicester to a rally in Loughborough.1846: Cook goes bankrupt.1850s: Cook's persistence results in his "Grand Circular Tours" of Europe.1928: Bought by Wagon-Lits; nationalised after Second World War. Thomas Cook misses the initial surge of the "package holiday" combining travel and accommodation.1970s: Midland Bank owns Thomas Cook for 20 years until the bank is bought by HSBC in 1992. 2007: After a series of owners, Thomas Cook and MyTravel merge and German consumer group Arcandor ends up with 51% stake in London-listed Thomas Cook Plc.2009: Arcandor goes bust and banks sell the stake at 240p per share

Low on options

Here's Nick Batram of Peel Hunt today: "Thomas Cook needs further assistance from its banks and this is unlikely to come cheaply or without preconditions which could involve equity. Thehe shares are best avoided until the picture clears."

No kidding. The terrible truth is Cook is running out of options.

It would seem to have three: 1. Raise cash through an unpopular rights issue from investors aggrieved at the share price.2. Do a debt-for-equity swap that would see the company effectively owned by the banks (that's us).3. Sell it for a knockdown price in an attempt to protect most of the 30,000 jobs.

Number three looks like the least bad scenario. The trouble is debts of towards £1 billion make it a far from alluring prospect.